For Small Businesses, Basic Bookkeeping Is Essential


While keeping track of company records might be difficult, simple accounting can help you remain on top of your revenue and expenses and in command of your money. This post will cover bookkeeping essentials, including managing business loans, business finances, financial transactions, income tax, and other assets and obligations.

What Is the Definition of Bookkeeping?

The first step in the accounting process is bookkeeping. It has to do with how financial transactions are documented and organized in your business's books.

When a supplier is paid or a client makes a payment, this information must be tracked and documented. It will allow you to maintain track of your business's incomings and outgoings and, as a result, "balance the books." Unlike accounting, however, bookkeeping does not include the reporting and interpretation of financial data.

What Is the Significance of Bookkeeping?

The processing and storage of your business records and financial statements are referred to as bookkeeping. You must keep up with your company's economic issues. Accounts receivables, payables, corporate tax, liabilities and equity, and other financial operations are only a few examples. There are a variety of small company bookkeeping guides accessible online.

Having proper bookkeeping processes in place can assist you in the following ways:

  • When it comes to paying suppliers, you should be aware of the due dates.
  • make it possible for you to keep track of clients who owe you
  • process sales invoice paperwork
  • Examine the company's financial flow, such as payroll.
  • account for profit and loss and balance sheets
  • produce financial reports for the company
  • forecasting and making future forecasts

You must retain and store accounting documents for a minimum of six years as a business owner.

What Is the Difference Between Accounting and Bookkeeping?

AAT (Association for The Advancement of Technology)

It is a typical question because there is some overlap between the two skill sets and job positions. The main differences between bookkeeping and accounting are clearly out in this video from AAT.

Is It Necessary for Me to Hire a Professional Bookkeeper?

Many small companies and single traders rely on accountants or accounting software to keep track of their finances. It entails handing over all of your books and records to the bookkeeper, who will complete the paperwork on your behalf.

Most bookkeepers are willing to come to your offices and perform your bookkeeping or give online accounting solutions. This accounting software is a computer application that acts as an accountant and bookkeeper for your company, keeping track of your financial data.

Other business owners will conduct their bookkeeping or enlist the help of a family member. It will entail:

  • Creating sales quotations and invoices
  • Invoices for sales and purchases are processed.
  • VAT returns preparation
  • Other costs are being processed.
  • Reconciliations of bank accounts
  • Reconciliations of petty cash
  • Debt collection
  • Suppliers' payments (with appropriate documentation, e.g.)
  • Keeping track of consumer payments
  • Wages are being dealt with.

Some business owners believe they can do all of the above activities on their own, saving them much money but taking much time. Others may perform parts of the actions themselves but outsource others to professionals, such as Bookkeeping pro services payroll or VAT.

If you opt to do the work yourself, you must maintain track of your finances.

Is There Any Software That Can Help?

Software may be pretty beneficial, especially when it comes to easy bookkeeping for a small business. There are several software providers to choose from, each offering a different set of services and features, ranging from the most basic to the most advanced.

Accounting software can provide the following features:

1.     Recording revenue and spending, financial reports, and budgeting are all essential accounting duties.

2.    Creating invoices and purchase orders, setting up automatic billing, processing single and regular payments, and bank reconciliation is all examples of automation.

3.    Tax preparation - filling out and filing tax returns online.

4.    Inventory management - keep track of stock levels, sales, and purchases.

5.    Timesheets, salary computations, payslips, and HMRC filings are all part of payroll processing.

To give you a sense of what's out there, here are two samples of accounting software:

  • Sage
  • Xero
Meanwhile, pre-accounting software like Receipt Bank may assist you by uploading bills, receipts, and invoices. If you want to decrease the amount of time you spend on admin, their free trial option is an excellent place to start.

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